High Court Decision in Omni Bridgeway v Bugsby Highlights Stringent Evidential Standards for Fortification of Cross-Undertakings

Citation: [2023] EWHC 2755 (Comm)
Judgment on

Introduction

The High Court of Justice judgement in the case of Omni Bridgeway (Fund 5) Cayman Investment Limited v Bugsby Property LLC & Anor addresses the application for fortification of cross-undertakings in damages by Bugsby Property LLC (“Bugsby”) against two litigation funders. Mr Justice Jacobs presided over the matter and rendered a decision that illuminates several pivotal legal principles regarding fortification, risk of loss, and the evidential threshold necessary to justify such a security measure in the realm of commercial injunctions.

Key Facts

Bugsby’s application centers on seeking fortification against potential losses stemming from injunctive relief obtained by the two litigation funders, Omni Bridgeway and Therium Litigation Funding AIC. The losses pertain to Bugsby’s endeavor to venture into the litigation funding market, with assumed returns of around 25%. Bench Walk Advisers LLC’s proposed co-funding arrangements are central to Bugsby’s plans. However, no firm offer was in place, just “indicative terms” subject to due diligence, internal approvals, and resolution of the dispute over the enjoined funds.

The legal principles in this case derive from previous authorities such as Energy Venture Partners Ltd v Malabu Oil & Gas Ltd and PJSC National Bank Trust v Mints. Central to these principles is the requirement for the applicant to show a ‘good arguable case’ that:

  1. They will suffer loss due to the injunction.
  2. The loss can be intelligently estimated.
  3. The prospective loss is likely to go unsatisfied without fortification.

In the current case, the court concluded that Bugsby could not establish a good arguable case that the claimed loss would indeed transpire because of the injunctions sought.

Another governing principle established in cases such as Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry pertains to the enforcement of cross-undertakings and the potential for reputational damage as a significant deterrent against non-compliance. Both Omni and Therium provided compelling evidence of their financial stability and intention to comply with cross-undertakings given their substantial involvements in UK litigation funding and the reputational repercussions for breaching such commitments.

Outcomes

The court dismissed Bugsby’s application for fortification based upon the speculative nature of its claimed loss and its inability to provide a solid evidential foundation to the standard of a ‘good arguable case.’ Furthermore, despite arguments to the contrary, Bugsby failed to disprove the funders’ financial credibility and compliance with cross-undertakings.

Conclusion

The court’s ruling in Omni Bridgeway (Fund 5) Cayman Invt Limited v Bugsby Property LLC & Anor underscores the rigorous evidential standards required for the fortification of a cross-undertaking in damages, reflecting a cautious approach where speculative business ventures and indeterminate future losses are at issue. The decision reiterates the principle that not every potential loss attributable to an injunction justifies fortification—such claims must be substantiated with credible evidence. Moreover, it emphasizes the criticality of a funder’s reputation and financial transparency in mitigating the court’s concerns over compliance with cross-undertakings. This case provides guidance to legal professionals on the treatment of fortification applications within the ambit of commercial court proceedings.